Group insurance from Aviva

Aviva has offered attract group insurance - term, critical illness and personal accident - to their existing policyholders under the SAF scheme and their spouses. I have looked at the premium rates and found them to be quite attractive.

I have recommended to consumers to buy term insurance (including critical illness and personal accident riders) and to invest their savings in a low cost investment fund. The group insurance offered by Aviva under the SAF scheme is suitable and get my endorsement.

If you are not an existing policyholder under the Aviva SAF scheme, you can get similar group insurance under the SAFRA scheme offered by NTUC Income - if you are a SAFRA member (and most Singaporeans are).

For the low cost investments, it is best to invest in the STI ETF managed by State Street (lot size is 1,000 shares or about $2900) or the fund managed by DBS (lot size is 100 shares or about $290). The transaction cost and expense ratios are quite similar in both cases. The DBS fund has the advantage of being in smaller lots. (Note: there is a minimum brokerage of 40% and a higher brokerage rate for smaller transactions, so it is not feasible to invest in 100 shares lot of DBS STI ETF. It is better to invest in the Statestreet 1000 shares lot.)

If you buy term insurance for protection and invest in a low cost investment fund, you will get a much higher return from this investment strategy compared to the high cost life insurance policies that are offered in the market now. This concept is explained in my book, Practical Guide on Financial Planning ($12) available here.

Tan Kin Lian